Friday, October 19, 2012

Teddy Roosevelt got it, but Mitt Romney doesn't get it!

Theodore Roosevelt was the leader of the progressive faction of the Republican party in 1910. He got the problem! The U.S. economy has returned to levels of inequality not experienced since his day. The impact will be felt in lack of economic growth and lack of opportunity for most American kids. Mitt Romney is the presidential candidate of the Republican party. He doesn't get the problem!

This is what Republican progressives believed in 1910: "The essence of any struggle for healthy liberty has always been, and must always be, to take from some one man or class of men the right to enjoy power, or wealth, or position, or immunity, which has not been earned by service to his or their fellows..........At many stages in the advance of humanity, this conflict between the men who possess more than they have earned and the men who have earned more than they possess is the central condition of progress. In our day it appears as the struggle of freemen to gain and hold the right of self-government as against the special interests, who twist the methods of free government into machinery for defeating the popular will. At every stage, and under all circumstances, the essence of the struggle is to equalize opportunity, destroy privilege, and give to the life and citizenship of every individual the highest possible value both to himself and to the commonwealth." Theodore Roosevelt

Today we find: "Including capital gains, the share of national income going to the richest 1% of Americans has doubled since 1980, from 10% to 20%, roughly where it was a century ago. Even more striking, the share going to the top 0.01%—some 16,000 families with an average income of $24m—has quadrupled, from just over 1% to almost 5%. That is a bigger slice of the national pie than the top 0.01% received 100 years ago." The Economist

What does this imply: "Two Spanish economists, Gustavo Marrer0 and Juan Gabriel Rodríguez, built an index of economic opportunity for individual American states. They found that states’ GDP growth was inversely correlated with their inequality of opportunity, but not with overall inequality. In a forthcoming World Bank working paper, Ezequiel Molina, Jaime Saavedra and Ambar Narayan find that countries with lower educational equality, as measured by the Human Opportunity Index, grow more slowly.

"This line of research is in its early stages, but a second strand of evidence, which examines the link between inequality and social mobility, is more developed. There are now plenty of studies which use the inter-generational elasticity of income to measure social mobility in different countries. Miles Corak, a Canadian economist, first plotted the results of these studies on a single graph. It is known as the “Great Gatsby Curve” (see chart 4), and suggests that countries with higher Gini coefficients tend to have lower inter-generational social mobility." The Economist

Source: The Economist
 From an interview with Mitt Romney:
QUESTIONER: When you said that we already have a leader who divides us with the bitter politics of envy, I’m curious about the word envy. Did you suggest that anyone who questions the policies and practices of Wall Street and financial institutions, anyone who has questions about the distribution of wealth and power in this country, is envious? Is it about jealousy, or fairness?
ROMNEY: You know, I think it’s about envy. I think it’s about class warfare. When you have a president encouraging the idea of dividing America based on 99 percent versus one percent, and those people who have been most successful will be in the one percent, you have opened up a wave of approach in this country which is entirely inconsistent with the concept of one nation under God. The American people, I believe in the final analysis, will reject it.
QUESTIONER: Are there no fair questions about the distribution of wealth without it being seen as envy, though?
ROMNEY: I think it’s fine to talk about those things in quiet rooms and discussions about tax policy and the like. But the President has made it part of his campaign rally. Everywhere he goes we hear him talking about millionaires and billionaires and executives and Wall Street. It’s a very envy-oriented, attack-oriented approach and I think it will fail

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